April 26, 2022
* dollar buying pauses in the U.S. session on Monday
* Gold & Silver get whacked on Monday…
Good Day… And a Tom Terrific Tuesday to you! What a awful ending to the game last night Cardinals / Mets… An error by the best 3rd baseman in the league, led to a 9th inning rally that pushed the Mets past the Cardinals… UGH! I was just saying to myself earlier in the game, “I don’t think I’ve ever seen Nolan Arenado make an error”… Oh well, game two of the 3 game set tonight… Walk it off! The St. Louisan, Max Scherzer, was fabulous for the Mets last night… He sure would look good with the birds on the bat, but that’s not to be… Loggins & Messina greet me this morning with their love version of a 10 minute song: Angry Eyes…
Well… throughout yesterday, the dollar held to its early and overnight gains, but didn’t build on any more, so the BBDXY ended the day at 1,229.33. You may recall that yesterday morning the dollar index represented by the BBDXY was trading at 1,229.31… So, just 2 index points added the rest of the day… Was it a pause for the cause? Or had the overbought position in the dollar gotten out of hand again?
Gold & Silver got whacked good again yesterday, but again, the same as the dollar, the metals lost most of their ground in the early and overnight trading the night before, and didn’t lose any additional ground throughout the day on Monday. Gold lost $33.90 on the day to close at $1,899.40, and Silver lost 62-cents to close the day at $23.71…
Pam & Russ Martens of www.wallstreetonparade.com wrote yesterday that the stock market sell off last week that started on Thursday losing over 300 points, and Friday nearly losing 1,000 points, was caused by Jerome Powell… Who said in a panel discussion on Thursday that the FOMC was looking to hike rates 50 Basis Points (1/2%) in May… You know, this got to me, because the Fed Heads have been talking about 50 Basis Points hikes at the next 3 meetings, but the stock jockeys ignored them, and the bond boys ignored them, and it wasn’t until last Thursday that the markets finally said, “he’s serious, isn’t he?”
Why they thought no one at the Fed/ Cabal/ Cartel would actually hike rates 50 Basis Points is that Jerome Powell, promised the markets months ago that he would deliver a soft landing while fighting inflation… I told you then, that you could be the farm that he wasn’t going to be able to deliver on that promise… The Fed’s history of guiding the economy out of the woods, has been horrible… It’s a good thing Little Red Riding Hood, has the Hunter to save her, because if she was looking for the Fed Heads to save her, she would have been the Big Bad Wolf’s lunch!
In The overnight markets last night… The price of Oil continues to drop, as people are finally starting to realize that the Chinese lockdowns are going to dampen the demand for Oil… Shortages equal price increases, which equal less disposable income to spread around a household…
Well, yesterday’s pause in dollar buying during the U.S. session, was over quickly, as the overnight sessions began. The dollar was getting bought left and right, and in between. The BBDXY gained another 2 index points to trade this morning at 1,231…. There’s just no stopping this runaway bus, that is the dollar these days, folks… It’s as if all these dollar bulls know in their heart of hearts that the future looks very dim for the U.S. economy, and they are getting theirs while the gettin’ is good… If you get my logic there… then you would be looking across the currency horizon and picking a commodity currency that suits your fancy… I’m just saying..
In the early trading this morning, Gold is up $6 and is back above $1,900, while Silver lags with 3 -cent gain… Ed Steer agrees with me on yesterday’s price action in Gold & Silver, that the traders took no prisoners… All they left was death and destruction! But Gold is not going to give up that easily, besides, how many times in the past have we seen the price manipulators go at Gold with both barrels blazin’, only to have Gold come back even stronger? Hold your fire, folks… That’s the best thing I can tell you at this point…
OK… Well, the dollar may be getting bought by the bushelful these days, there’s one currency that’s bucking the trend… A couple of months ago, you wouldn’t have believed it if I told you it was the Russian ruble, right? But fast forward to now, and the ruble is the best performing currency in the past month! Ever since Russian el hefe, Putin, said that to buy his gas, countries would need to either pay for it in Gold or rubles, the demand for rubles by countries has gotten very strong, thus the rally by the ruble…
The ruble is now trading at a 2-year high VS the dollar… The Aussie dollar (A$) which had everything going for it, two weeks ago, found itself caught up in all the U.S. dollar buying, and saw its trading figure drop from 76-cents to 71 cents yesterday morning… Fundamentals say the A$ should be soaring, with commodity prices still on the rise… but we all know that fundamentals no longer exist in currency trading, it’s all tied to “trader sentiment”…
Me, being a person that depended on knowing the fundamentals of the countries we traded currencies in, would be totally lost in today’s environment… Boy, sometimes I’m glad that TIAA showed me the door, and told me not to reenter it! Of course now that I’m talking about that, I personally would have liked to gone out on my own accord, not someone else’s… I’m just saying… Of course the bank called it my reitirement, and that’s fine with me after all this time…
The Chinese renminbi has really been on the down side of trading lately… For ever and a day it seemed the renminbi was trading around 6.36 to the dollar, but in recent rrading it has fallen to a 6.55 to the dollar… While the renminbi is still having its price range set by the PBOC (peoples bank of China), the markets are pushing the tradeable renminbi lower, and so, for the traditional renminbi it gets weaker too… This currency like no other currency become political… And it won’t be long before U.S. leaders begin to claim that China is allowing the renminbi to get weaker on purpose… I kind of get the felling that China is allowing the renminbi to get weaker, as a way of getting back at the U.S. for all the bad mouthing and tariffs, etc. that has been thrown at them in recent years…
Well, I was aghast at the headline in my local paper on Sunday… The headline read: “Biden announces $800M in new military assistance for Ukraine”, I thought… Hmmm. I guess we had an extra Billion laying around doing nothing, certainly not earning any interest, and we could afford to send $800 Million to a country in war… I don’t mean to sound like we shouldn’t help out Ukraine, but… it’s not like we have the extra Billion laying around, right?
Like I said in my Sunday Pfennig many years ago… “The U.S. needs to sop spending money on things they don’t have the money to spend. This would require austere measures by Congress, and while I doubt they can adhere to such measure, I also think it would behoove them to do so, immediately, if not sooner!”
OK… Can you guess how many dollars worth of Derivatives are out there right now? Well, there’s no one better to tell you this info than the folks at www.wallstreetonparade.com Take it away Pam and Russ Martens: “There is no better snapshot of the Fed’s failure as a banking supervisor than this one fact that is called out every quarter in the Office of the Comptroller of the Currency’s Report on Bank Trading and Derivative Activities. Table 14 of this report (see page 19) shows that the 25 largest bank holding companies in the U.S. are sitting on $234 trillion notional (face amount) in derivatives but just five bank holding companies are responsible for $200.18 trillion of that exposure or 86 percent of the total. Those mega bank holding companies are: JPMorgan Chase (ticker JPM), Citigroup (C), Goldman Sachs (GS), Morgan Stanley (MS) and Bank of America (BAC).
The table also clearly shows that the most dangerous form of these derivatives – the same credit derivatives that blew up Wall Street in 2008 – are also concentrated at those same five bank holding companies.”
$234 Trillion… can you imagine, no wait, don’t go there Chuck, because that’s scarier than what happened in 2007 & 2008… Is there any reason why these derivatives are that astronomically $235 Trillion?
I just see this all ending in tears folks… And that’s all I’ll say about that!
The U.S. Data Cupboard today has a couple of economic prints for us, in the March Durable & Capital Goods Orders, wich in Feb were both negative. We’ll also see the Fed print of the Case/Shiller Home Price Index, which at the last print was up 19% year on year… Feb was still before the Fed hiked rates, so I would think that the Fed print would be the last one to show home price gains, so we’ll see…
To recap: All the dollar buying, and currency selling, along with metals selling was over by mid morning yesterday, and the rest of the day these assets held steady Eddie… Gold has really gotten whacked in the last 3 trading sessions, and that makes no sense whatsoever to Chuck. Sure the Fed made certain that the markets know they will hike rates 50 Basis Points, but even after doing that, the Fed Funds Rate will still be below 1%… C’mon, give me a break!
For What It’s Worth… Yesterday, I told you about how Japan had asked the U.S. to intervene to help the yen, and the day before that I told you how Japan’s yen was at lows not seen in a month of Sundays, and today’s article tells you why Japan is in this mess… Deficit spending… And this article can be found here: Japan To Spend Billions To “Ease Inflationary Pain” Caused By Spending Billions | ZeroHedge
Or, here’s your snippet: “How stupid are today’s monetary and fiscal policies (and not just the bat-shit insanity that is Helicopter money, a/k/a MMT?) So stupid that in Japan, the government is about to spend billions to “ease inflation pain” that is the result of… spending billions.
According to the Nikkei, Japan plans to spend 6.2 trillion yen ($48.2 billion) on – get this – gasoline subsidies, low-interest loans and cash assistance “to alleviate the pain of consumers and small businesses facing rising prices”, which were caused by, well, massive government spending.
The government frames the economic package, to be compiled as early as Tuesday, as comprehensive relief measures. But critics – at least those who refuse or fail to see the real monetary elephant in the room – see them as a short-term remedy, especially as other countries tackle more fundamental changes on energy and other key economic factors in response to Russia’s invasion of Ukraine.
To pay for the package, the government will request 2.7 trillion yen under a supplementary fiscal 2022 budget to be drafted by the end of the current parliamentary session. It will secure another 1.5 trillion yen from its reserve funds. Together with private-sector contributions, the entire package is expected to total 13.2 trillion yen.”
Chuck again…. This all started in the mid 90’s, with their stimulus packages, and special budgets, and things like deficit spending spiraled from there, and here we are over 2 decades later, and Japan still hasn’t learned anything, and they’re still printing yen, and trying to stimulate the economy… When will they every learn? When will they ever learn?
Market Prices 4/26/2022: American Style: A$ .7200, kiwi .6630, C$ .7884, euro 1.0674, sterling 1.2684, Swiss $1.0438, European Style: rand 15.7210, krone 9.1734, SEK 9.7403, forint 350.89, zloty 4.3551, koruna 22.8556, RUB 74.36, yen 127.50, sing 1.3739, HKD 7.8447, INR 76.43, China 6.5428, peso 20.28, BRL 4.9182, BBDXY 1,231.52, Dollar Index 101.96, Oil $99.81, 10-year 2.76%, Silver $23.65, Platinum $922.00, Palladium $2,285.00, Copper $4.50, and Gold… $1,904.09
That’s it for today… And this week, sorry about that… I didn’t realize I had those two doctor appointments back-to-back until this past weekend, when I looked at my calendar to see what was ahead… UGH! Well… the weather hee in the Midwest is not the end of April-like… It’s going to be quite chilly some days as we head into May… Crazy weather! I would be basking in the 80 degree sun, if I had stayed in S. Florida! A tough loss for my beloved Cardinals last night… Gotta lace ’em up and go at again tonight fellas! Our hitting, which started the year on fire, has gone cold… That’s not a good recipe for today’s game that requires multiple runs each game… I do believe I’m missing someone’s birthday, so if it’s you, I’m sorry… I used to have Jen Mclean sitting next to me and she was the gate keeper of birthdays, and she would tell me when one was coming… AC/DC take us to the finish line today with their song: Rock & Roll Ain’t Noise Pollution… I hope you have a Tom Terrific Tuesday today, and a super week ahead of you, and please Be Good To Yourself!
Chuck Butler